All Newspaper editorials in one place – January 26, 2024



January 26, 2024

An exchange

India’s research institutes need top-level collaboration across the world


While the Centre has announced the first set of recipients of a fellowship programme called Vaibhav (VAIshwik BHArtiya Vaigyanik), the premise of the initiative remains intriguing. Scientists of Indian origin, or of Indian ancestry, can apply to spend up to three months in a year, for three years, at a host research laboratory in India. In that period, these researchers are expected to begin a project or technology start-up, build long-term connections with the institute, collaborate with the host faculty and bring in new ideas to the field, in Indian university and research settings. As the programme gains momentum, officials say, new kinds of relationships could emerge: the Indian origin faculty could be encouraged to take on students, more associates and even supervise degrees that could lead to a genuine transfer of knowledge, innovation and work culture and perhaps optimistically, the non-resident Indian scientist even considering staying on in India.


Vaibhav is not an original idea. During this government’s tenure itself, the Department of Science and Technology (DST) conceived the VAJRA (Visiting Advanced Joint Research) Faculty Scheme with similar objectives. The differences in the two schemes are minor. Vaibhav is exclusively for the Indian diaspora, while VAJRA can include other nationalities too. VAJRA, though generous in the amount offered as fellowships, was restricted to one-year engagements, unlike Vaibhav which pays less but extends to three years. The DST, which is in charge of both schemes, says that nearly 70 international faculty have spent time in India as part of VAJRA, though there have been concerns over the effectiveness of the scheme. Currently, officials say, both schemes will continue. While facilitating exchange between Indian and foreign universities is welcome, there ought to be clarity on what India hopes to gain by specifically focusing on the Indian diaspora. Through the decades, much ink has been spilt on the problem of ‘brain drain’, where talented researchers went abroad for want of commensurate opportunities in India. While economics and individual proclivities heavily influence such decisions, short-term fellowships are useful in priming foreign faculty and researchers to the potential for science in India. They can also lay bare the challenges — the lack of funding for basic research, the lack of participation by private companies in core research and development and limits on academic freedom — and trigger changes in policy. The tremendous competition for tenured jobs in American and European universities means that there is a vast pool of skilled scientific manpower, trained abroad, who can be brought back or retained in India. Realistic expectations must be the touchstone of such engagements. It remains to be seen if the presumption that scientists of Indian origin will be likelier to stay back, indicated by the ethno-nationalist restriction, will bear fruit.





January 26, 2024

The last mile

Governments must offer fair wages to those at end of the services delivery line


Underestimating the last mile in the delivery of services would be a terrible mistake. Particularly for the state, it is important not to take for granted those who are placed at the end of the line, ensuring that connect between its schemes and the people. In this respect, the recent agreement with Anganwadi workers and helpers that ended their strike in Andhra Pradesh was a belated recognition of their place in maintaining continuum of care. The protest, a fast-unto-death, went on for a record 42 days in Vijayawada, and the end came after some acrimonious exchanges between protesters and the state. The State government agreed to meet 10 of their 11 demands. This included implementing promised salary increments, paying travel allowance and dearness allowance, providing life insurance and accident insurance cover, and end-of service benefits. In addition, they sought funds to address structural, aesthetic and sanitation flaws in the anganwadi centres. The ruling Yuvajana Sramika Rythu (YSR) Congress Party initially took a tough stand against the Anganwadi workers, issuing show cause notices, and invoking the Essential Services Maintenance Act against them, but finally took the right steps.


It is unfortunate that governments tend to look at unionised protests and protesters as importunate, without first considering the merits of their representation. In this instant case, the Anganwadi workers and helpers have a multitude of tasks — bringing children to their centres, taking care of toddlers, arranging the meals, feeding them, teaching them. Besides, they are roped in to provide health and nutrition education and counselling on breastfeeding and infant and young child feeding practices to young mothers. Being the closest to the community, particularly in rural areas, they are expected to influence families to get the children’s births registered, take across the message of family planning, and assist primary health centre staff in making sure ante and post natal commitments are delivered. While they might be located at the end of the line, it is no measure of their importance in the delivery line. The State government has done well, though after over a month, by acceding to most of their just demands, particularly the decision to increase their compensation. It is now its duty to withdraw all the cases lodged against Anganwadi workers, pay the salary for the strike period and not take further punitive action against them.





January 26, 2024

Republic restated

Let January 26 be a reminder of continuity of the republic and primacy of the Constitution that binds it and keeps it honest


There are times in the life of a republic when it must pause and take stock of the arguments within, and rededicate itself to being its own best version. This Republic Day, the 75th, brings this moment. Today, there are impatient and contending ideas of what the nation is, what it can be. The dominant idea, which has been drawing support electorally, is an exhortation to break from the past, to create, almost, a second republic. One that relocates itself, in Prime Minister Narendra Modi’s words, in the space that joins “dev” with “desh”, “Ram” with “rashtra”. The effusively worded Union Cabinet resolution Wednesday congratulating the Prime Minister on the consecration of the Ram temple at Ayodhya echoes this idea of a new era dawning and a nation reborn — while the “body” of the country attained independence in 1947, it says, “the pran pratishtha of its soul was done on January 22, 2024”. In a country of the young that is increasingly turning its face to the world, this idea is sought to be articulated in encompassing terms, to fold in not just the past but also future technologies, not just heritage but also modernity, an updated infrastructure as well as more efficient welfare schemes. Republic Day comes as a reminder that any attempt to recast and remake the nation, howsoever tall or righteous its claims, must necessarily be tested against the touchstone of the values and ideals enshrined in the Constitution that, 75 years later, continue to animate and nourish the republic.


India’s Constitution has endured over decades because it is capacious and accommodative, because it adapts to change and leaves space for negotiations. It is not a platform for fixities. Even the basic structure that cannot be amended, as interpreted by the apex court, is a set of features very broadly defined. In a time when winner-takes-all seeks to become the reigning dictum, and when the opposition spaces seem to shrink, a restatement of the Constitution’s basic features is in order, in letter and spirit. It means, at the very least, the primacy of the rule of law and due process, not the instant state-sponsored vigilantism of the bulldozer. It means that victory must always be leavened by humility — indeed, the PM bracketed “vijay” with “vinay” — and that both the winners and losers should recognise that the rules of the game, anchored in the Constitution, are larger than both, will outlive both.


Let this January 26, therefore, be a reminder of the continuity of the republic. And of what binds it, and keeps it honest, through the ups and downs of politics and history.




January 26, 2024

Going solar

Rooftop installations in one crore households is a promising scheme. Past experience with renewable energy offers lessons


In one of his first decisions after becoming Prime Minister, Narendra Modi had set a target of installing 100 GW of solar power in the country by 2022 — 40 per cent of this energy was to be generated from rooftop installations. Though the country’s renewable energy (RE) sector has made appreciable strides in the past 10 years, it missed the 100 GW target by a long margin — the 2022 deadline has been pushed back to 2026. The patchy performance of rooftop installations is a major reason for this failure — the capacity of such systems is currently less than 12 GW. The Pradhan Mantri Suryodaya Yojana (PMSY), a new scheme announced by PM Modi on Monday, can place the decentralised solar power segment on a better footing. It aims to take solar power to one crore households.


Installing solar power is expensive for an individual household. That’s why less than a fifth of the rooftop installations are in the residential sector. At the same time, subsidies on energy generated from conventional power sources make RE an unattractive proposition. Central and state government subsidies for solar installations, in contrast, are offset by deterrents such as cumbersome procedures and quality issues. The government’s failure to frame convincing solutions, especially its flip-flops, seem to have made the problem more intractable. Its 2019 policy required households availing the subsidy to buy solar panels and inverters from companies empaneled by the Ministry of New and Renewable Energy (MNRE). The provision was meant to enable the government to monitor the quality of the rooftop systems. But the centralised system restricted consumer choice and three years later, the ministry relaxed this requirement. “The government will publish the lists of solar panel manufacturers and inverter manufacturers whose products meet the expected quality standards,” the MNRE noted. By all accounts, the change has not made a perceptible difference.


Companies, too, face difficulties in achieving economies of scale when they target individual households. Vendors, therefore, prefer servicing commercial consumers. Gujarat — the state with the most rooftop installations — has tried to address these issues with aggressive awareness campaigns and timely disbursal of subsidies. But with the grid getting a substantial amount of electricity from households, the state’s discoms are confronted with the most difficult problem with RE — intermittent supply. The details of PM Modi’s new scheme are not yet in the public domain. The government would do well to learn the right lessons from the country’s past experiences with solar power.





January 26, 2024

World No 1

For Rohan Bopanna, a first men’s doubles Grand Slam title will be the next step


Defying both age and expectations, India’s top-ranked tennis player who has ensured consistent representation at the Grand Slams in the past few years, Rohan Bopanna, became the men’s doubles World No 1 at the Australian Open. Bopanna made history as the oldest World No 1, in any discipline, after reaching the summit of the sport at the age of 43. With a win away from another Grand Slam title, he has proved that age is just a number.


With a big serve and solid forehand, Bopanna was never a typical modern tennis talent in a generation that increasingly veered towards baseline rallies and athleticism. Having pivoted to doubles early in his career, he won four Masters 1,000 titles and a maiden Grand Slam title in mixed doubles. But as he approached 40, injuries and physical issues began to take their toll, and it was Bopanna’s emphasis on staying mentally and physically fit that helped him recover from career-threatening knee injuries. His transformation paid off with a late-career resurgence as he reached the US Open final 13 years after his first last year, and he has now become the fourth Indian, after Sania Mirza, Leander Paes, and Mahesh Bhupathi, to become double World No 1.


Doubles, especially on the men’s side, no longer has the same star power as the days when Martina Navratilova, John McEnroe, and Steffi Graf used to be the main draws. Eyeballs are far fewer as the doubles format has struggled to captivate fans even as singles tennis veered towards powerful displays of athleticism. For reaching the semifinal, Bopanna will earn less than what women’s singles World No 1 Iga Swiatek pocketed for her shock third-round collapse. While that may put things into perspective, it is to Bopanna’s credit that he was able to exploit the gaps in the doubles game and make a triumphant return straight to the top of the pile. A first men’s doubles Grand Slam title will be the next step.





January 26, 2024

Republic’s Women

Their equal rights are still getting trampled. Even constitutional courts aren’t safe spaces


What are a woman’s rights and duties? In the rich and varied weave of our society, this question has as many answers as the times it is asked. But when it is asked of courts, there must be greater standardisation. Our constitutional courts must take guidance from the great document that came into effect on this day 74 years ago. If they keep muddling the issue with reference to ancient texts or traditions, that’s unjust not only to one woman in one case. Denial of equal rights to women is holding back India itself.


Wife isn’t synonym for drudgery | This week Jharkhand HC opined that it is “obligatory” for a wife to “serve” her mother-in-law and grandmother-in-law; and not make “unreasonable” demands to live separately. It quoted from Yajurved, Rigved, Manusmriti and Brihat Samhita. The case only concerned maintenance, which HC disallowed for the wife and increased by 66% for the minor son. Problem is clear. Instead of sticking to facts, court is propagating a subjective morality.


Husband isn’t synonym for saint | Sons are enormously coddled in Indian families but courts shouldn’t continue this nannying. Courts shouldn’t echo mohalla bullies in declaring that where a married couple lives cannot be their decision alone. After all, a neighbourhood might also believe that honeymooning is anti-Indian or only to be done with mother-in-law in tow. A young wife insisting otherwise is hardly “torturing” her husband. Courts must stop reading such in-differences from the point of view of “poor husband”.


Break out of these cages | These blinkers are of course turned against “the second sex” from childhood on. Aser 2023 describes how even young girls’ desire to continue studies after Class XII is linked to school being “their only escape from their household duties”. It is in continuum that a Kerala HC judgment suggested that making a daughter-in-law do all domestic work or abusing her is “not something unusual”. All of this is deeply damaging to women. And courts keep telling women to just accept such treatment as their “culture”.


What about the culture of Constitution of India? Right to equality. Right to freedom. Right against exploitation. Women who are before courts are the minority who have found the courage and support to fight, rather than surrender to unjust social norms. Judges must remember that.




January 26, 2024

Mess Up, Pay Up

Polluter pays principle is the foundation of environmental laws. It needs to be applied strictly


A National Green Tribunal bench recently said that beginning this year immersion of idols in water bodies in Chennai during Vinayaka Chaturthi celebrations can be done only after a fee is paid. The fee will be used to clean the water bodies. The bench termed it an application of polluter pays principle.


1996, the turning point | In India’s environmental jurisprudence, a case decided by Supreme Court 28 years ago carved out principles of compensation. Vellore Citizens Forum had approached the judiciary seeking protection from release of effluents by tanneries that damaged agricultural land and polluted water bodies.


Twin remedial principles | SC relied on precautionary principle and polluter pays approach to decide the case. Precautionary principle was interpreted as the need for statutory bodies to anticipate and prevent environmental degradation. Polluter pays principle is universally applied. It’s based on commonsense approach that costs of cleaning up and compensation must be borne by polluting entity. SC concluded: “We have no hesitation in holding that the precautionary principle and polluter pays principle are part of the environmental law of the country.”


Downstream impact | NGT has repeatedly used these principles to order polluters to bear costs of clean-up. Among two recent cases are one decided last year where Bihar’s government was asked to shell out compensation of ₹4,000 crore for violating laws on managing solid and liquid waste. In another case, NTPC was asked to bear costs for violating waste disposal rules in Uttarakhand.


Polluter pays principle is the basis for environmental laws across the world. It’s a check on the tendency to pass on pollution costs to the rest of society and ensures that costs are borne by just polluters.





January 26, 2024

Hello Intl Changes, Now Plug Into Mfg

Real benefits await demand from large caps


New rules on listing on international exchanges — limited to those in Gujarat’s GIFT City — will aid India in realising its vaulting manufacturing ambitions. The cross-listing premium on an international exchange can be considerable, and it improves with increased proximity to investors on Wall Street. The implied cost of equity capital is significantly lower, as are yield spreads in debt offerings. The regulatory environment also imposes its own costs on capital raising, and Indian companies eyeing a global footprint would try to avert the ‘country risk’ penalty for mainland firms. This segment of companies will also seek to improve valuations through institutional development available in the global capital market.


The first wave of overseas listing will most likely be led by sunrise industries like pharma and clean energy where companies have clear strategies for global expansion and are aligned with sustainability sensitivities of international investors. This cohort will need corporate controls of international standards to be able to draw improved valuations and enhance brand visibility. The startup ecosystem should also contribute going by the share of Indian unicorns that have incorporated themselves in overseas jurisdictions. But real benefits of cross-listing will have to await demand from Indian large caps wanting to bridge the structural gulf in capital costs between domestic and international markets. This would be a function of the pace of development of the Indian financial system. By one estimate, the combined market value of Chinese companies listed in New York in Q1 2019 was around 14% of the combined value of the Shenzhen-Shanghai-Hong Kong equity universe.


India is just about embarking on this journey with the expectation that local companies will eventually line up to cross-list. It is testing the waters with its own offshore exchanges, and valuation gains may not be quite as impressive as those enjoyed by mainland Chinese companies on Wall Street. But it creates a framework for Indian companies to think big, a necessary condition for the country to emerge as a global manufacturing base.





January 26, 2024

Putin Makes Europe Expand NATOrally


Sweden’s attempt to join Nato got a boost this week, with Türkiye and Hungary agreeing to back the Scandinavian nation’s candidature. Both have been opposing Sweden’s entry for the last two years. For a new country to join the military alliance, which also includes the US and Canada, existing members must approve it. Sweden, like Finland, has not fought a war in two centuries, staying neutral through World Wars and the Cold War. But their neutrality was put to test after Russia invaded Ukraine in 2022, and there was a growing public demand in both countries to join Nato. Finland’s bid was cleared in 2023.


Vladimir Putin had long expressed concerns about the expansion of Nato — set up in 1949 to provide security against the Soviet Union — citing it as a factor in his war with Ukraine. Ironically, the war has only pushed Sweden and Finland to join the alliance. Sweden’s entry will strengthen Nato further because it has consistently invested in defence. Stockholm will bring considerable military capabilities equipped with modern weaponry on land, sea and air, and it will alter the political strength of the alliance in favour of Europe.


While the prospect of a second term for Donald Trump — his animosity towards Nato and all security alliances the US is part of is well known — is growing and a growing concern, entry of Sweden and Finland puts Europe on firmer footing. Irrespective of the outcome in Ukraine, Putin is unlikely to give up on his ambitions. While Europe is fortified, a weakened Russia closely allied with China could give a new direction to Putin’s ambitions under Beijing’s gentle guidance. That is something that India, and the Indo-Pacific, need to keep in mind.




January 26, 2024

Bright prospects

Rooftop and community solar, the way forward


Even as details are awaited, it is clear that the PM Suryoday Scheme unveiled on January 22 to provide one crore ‘low and middle income’ households with rooftop solar electricity holds out considerable promise. It is not clear whether the scheme is part of the existing rooftop solar subsidy programme which offers a subsidy of just under ₹15,000 for every kWh of capacity installed up to 3 kWh, or intends creating a separate set of ‘small-scale’ incentives.


It also remains to be clarified how low- and middle-income households will be identified; nor are deadlines mentioned. Be that as it may, the scheme’s focus on household rooftop solar must be welcomed. This segment accounts for a capacity of just 2.7 GW, while commercial and industrial establishments have created the bulk of the total rooftop solar capacity of 11 GW. Solar capacity growth has been driven by utility solar (total solar capacity stands at 73 GW), with rooftop not finding takers despite a capital subsidy of about 30 per cent in place. There are several reasons for this. First, discoms do not encourage rooftop solar as they lose revenue in the process — the rooftop feed into the grid is deducted from the bill. Second, at the lower end of household use, precisely the consumers the new scheme rightly targets, rooftop solar does not appear attractive.


Household rooftop solar has been driven by urban affluent users, who are able to effect bill savings of 40 per cent at monthly levels of electricity use that exceed, say, 1,000 units. A household that consumes 1,300 units per capita per annum, roughly the national average, can meet its needs through a 1 kWh panel, which may cost them ₹50,000 even after subsidy. However, the power tariffs at the lower slabs are too low, if not free, for such an investment to seem worthwhile. Rooftop solar finds no takers in States with free power for lower-end consumers. Therefore, to encourage the greening of energy use, free power should be restricted , and the money saved should be used to promote rooftop solar.


There are ways, apart from tariff rationalisation, to improve capacity creation in household rooftop solar. Discoms should shed their resistance to this route. At the lower end, the cost of supplying power exceeds the revenue, if any, and hence the shift to solar would prune losses. What can really work as a gamechanger — and should be woven into the rules of the new scheme — is to aggregate lower end users into a community model. The ‘green open access rules’ announced in 2022 allow for the creation of a 100 kWh community power project, which opens up interesting possibilities. Numerous investors can invest in a 100 kWh capacity, not necessarily located on their rooftop, and offset the power so generated against their use . This would help poorer households benefit from scale economies. In all, household rooftop solar is a good option but it needs more than just capital subsidy to make it work.





January 26, 2024

A rational call

Tariff revision can enable telcos to spend on infrastructure


The commentary after the recent Reliance Industries quarterly earnings has brought the focus back on the need for rationalising telecom tariffs in India. The immediate trigger is the rising customer base of Reliance Jio but flat monthly average revenue per user (Arpu). The company reported an Arpu of Rs 181.70 in the third quarter, the same as in the previous quarter, and slightly up from the Rs 178.20 in the same quarter last year. In the telecom industry, Arpu is like a currency that captures the health of a telco. Multiple analysts’ reports have rightly pointed out that telcos must monetise their pan-Indian 5G services through tariff hikes for a stronger business performance. They have also highlighted delayed tariff hikes in the industry as a downside risk for the sector. Their projection of a significant tariff hike ranging from 10 to 20 per cent in 2024-25 could mean Jio’s monthly Arpu going beyond Rs 200. That’s a welcome pointer for the sector. If Jio, which is the industry leader with the highest number of mobile subscribers, raises tariffs, others are bound to follow.


Over the past couple of years, there have only been marginal hikes in telcos’ charges in the country, keeping the phone bill low for the users. Even as consumers have no reason to complain on the mobile tariff front, they are losing out on quality. Call drops and poor signal have affected the quality of mobile telephony, prompting a large majority of phone users to opt for WhatsApp calls. Tariff revision should enable telcos to spend more on better infrastructure and indoor solutions so that users get satisfactory services without having to go to alternative platforms to make a call. This will also help the industry offer 5G services, which are robust and efficient. Besides, the telecom industry, which has faced substantial financial stress and still runs the risk of becoming a duopoly, needs to regain health and be a bulwark for the digital powerhouse that India aims to become in the near to medium term.


Further, for flagship schemes of the government such as Digital India to succeed, telcos must provide the right impetus and connectivity. For that, the return on capital has to improve and losses have to be contained. Leading telcos have spent around Rs 1 trillion each in the last two years on various things, including 5G spectrum. Among the telcos, only Bharti Airtel’s Arpu crossed the Rs 200 barrier recently. All others are below that level. The numbers in India are a fraction of the Arpus of international telecom firms. The Indian telecom industry combines many unique aspects — it has among the cheapest providers of services in the world and a national teledensity of about 85 per cent, and with room to grow. And it’s predominantly a prepaid market. The country’s mobile telephony sector, which showed much promise, has witnessed many upsets through the years — the biggest being the cancellation of numerous telecom licences in 2012 following the alleged 2G scam.


For the telecom industry to regain its place in the India growth story, it is important that tariffs are set rationally, and that will allow firms to make necessary investments in this capital-intensive business to constantly move ahead on the technology curve and improve services for consumers. The expectation is that telecom tariffs will increase after the Lok Sabha elections.




January 26, 2024

Mass mobility

FAME-III will drive low-emission public transport


With the second edition of Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles (FAME-II) about to end in March, the government is reportedly drawing up the contours of FAME-III, focused on mass mobility. The plan is to replace 800,000 diesel buses, which account for one-third of the buses on the road, with electric buses to make public-transport systems more environmentally sustainable. The shift in focus to mass mobility, which delivers better emission outcomes than personal mobility solutions do, is a good decision. To this end, the government is reportedly planning more than halving FAME funds for e-two-wheelers on grounds that the penetration of e-buses has fallen sharply to 3.3 per cent in 2023 from 4.6 per cent in 2022. Only 4,000 e-buses ply on roads compared with 2.3 million diesel and CNG (compressed natural gas) buses. The scheme under discussion seeks to address some of the issues that have limited the penetration of electric vehicles (EVs) — such as earmarking funds for charging infrastructure, especially on highways, and on enhancing EV facilities around the country.


Overall, however, FAME-III’s success is dependent on the state road transport undertakings (SRTUs), which are mostly in a parlous financial state. According to the data from the Ministry of Road Transport and Highways, only seven of the 56 SRTUs made profits in 2018-19, the latest year for which figures are available. Betting on such shaky state-owned utilities can be risky as shown by the serial plans to bail out chronic loss-making state-owned power distribution companies (discoms). Though FAME-III will have a sunset clause of two years, there is no gainsaying that it will not be continued, so it needs to be designed to deliver the government’s objectives optimally. More lasting success could be achieved if the scheme sought to address some of the key problems that resulted in a patchy record for the mass mobility programme under the earlier Jawaharlal Nehru National Urban Renewal Mission (JNNURM), which began in 2009. Transport economists have suggested the JNNURM might have been more successful had it included the development of related support infrastructure, especially for less profitable or loss-making SRTUs, such as depots, terminals, workshops, and so on. The upshot of this deficiency in many SRTUs was that the buses tended to be poorly maintained and their life-spans shortened, defeating the purpose of the scheme.


That said, FAME-II has addressed a key weak point of the JNNURM. That is ensuring that the operation of buses is built into the financing scheme. Under the JNNURM, the focus on buying buses of a particular (upgraded) specification did not necessarily mean that SRTUs actually operated them. Several merely bought buses under the subsidy, and then they lay idle. Under the existing scheme, buses are supported through an operating-cost model for 12 years. FAME III may tweak this by reverting to the capex model for SRTUs operating in hilly terrains on shorter routes. Also in the works are plans to aggregate large tenders to drive down unit costs in place of the JNNURM model of having SRTUs raise tenders based on central guidelines. Well designed, FAME-III could be a game changer for India. The challenge is to not let it go the way of the multiple discom bailout schemes.




January 26, 2024

IMEC blues

The corridor makes for compelling geoeconomics but geopolitical tensions could delay it


Escalating geopolitical tensions in the Middle East cloud the prospects of the game-changing India-Middle East-Europe Economic Corridor (IMEC) proposal, which was announced on the sidelines of a G20 summit last September. While details of the corridor are still scant, the MoU revealed the basic outline of a ship-to-rail transit network that will supplement existing maritime and road transport routes. The MoU signed by leaders of the US, India, the European Union, France, Germany, Italy, UAE, and Saudi Arabia has not delivered on the intention to meet within 60 days to “develop and commit to an action plan with relevant timetables.” It is imperative that this proposal goes forward as it makes for compelling geoeconomics. Even if it is delayed, it should not be derailed as leading partner countries like the US get drawn deeper into the ongoing conflict between Hamas forces and Israeli army, disrupting shipping in the Red Sea, the route to and from the Suez Canal which is the quickest way for goods to transit between Asia and Europe. The Suez Canal accounts for 30% of container ship traffic.


IMEC must therefore be implemented as it meets the geoeconomic objectives of partner countries, especially India. The proposed corridor from India can deliver goods to Europe 40% faster than through the Suez Canal. Whether this is more cost-effective than India shipping goods through the Suez Canal is a different matter. But IMEC bypasses the disruption to global trade as the first leg of the route will be by ship from Indian ports to Jebel Ali in the UAE. The goods then go by rail through Saudi Arabia and Jordan to Haifa in Israel. From there, they will again be shipped to Piraeus in Greece and reach European markets. IMEC serves India’s objectives in aligning with US-led connectivity initiatives so that it positions itself as a major hub for diversified supply chains across the Indo-Pacific region. It reflects the plan to extend those supply chains to the Middle East and European markets. To the East, in partnership with Japan, India has been silently developing a corridor across the Bay of Bengal linking to Southeast Asian manufacturing hubs.


Although IMEC’s progress is predicated on the raging Middle East conflict being contained, India must be better prepared to leverage its benefits once it takes off. For starters, IMEC nodal points on the western coast line must be better aligned with dedicated freight and logistics corridors that transport containers from metropolitan growth centres like New Delhi, Hyderabad, and Bengaluru. The challenge is that these corridors do not extend to southern India. Their containers would thus have to head to Colombo in Sri Lanka via Chennai or Thoothukudi. Although Colombo is the largest transshipment terminal in the Indian Ocean, there is a need for additional capacity as its utilisation rate has exceeded 90% since 2021.


India’s port infrastructure too will have to be upgraded. Towards this end, the agreement between Deendayal Port Authority and UAE’s DP World to develop the container terminal at Kandla port is a step in the right direction. Above all, India must find ways to engage regional players like Qatar, who have not been included in IMEC. Turkey has suggested an alternative proposal to Saudi Arabia and Israel through Iraq and itself to access the Mediterranean route. Egypt also needs close attention as its revenues from the Suez Canal would be adversely impacted by IMEC.




January 26, 2024

Tesla earnings: Musk’s next growth wave is still far


Henceforth, no company should ever say they are experiencing a slowdown. Tesla Inc. has redefined this experience as being “between two major growth waves.” Full marks to whomever coined that surfer-dude promise of the doldrums soon giving way to another thrilling ride. Tesla’s infeasibly buoyant stock demands nothing less.


Tesla’s fourth-quarter results, which dropped Wednesday evening, capped off a lacklustre year. Despite selling roughly half a million, or 3 8%, more vehicles in 202 3, operating profit fell by a third. For that, blame a succession of price cuts to shore up demand, taking implied revenue and gross margin per vehicle downbyl5%and 44%, respectively. Moreover, having guided since early 2021 that annual growth in vehicle production would be 5 0%, compounded, it was clear that Tesla would likely miss that in 2024.


This was all foreshadowed on the third-quarter results call when Chief Executive Elon Musk responded to a question about the 50% growth target by essentially mocking the question: I mean, the risk is stating the obvious. It’s not possible to have a compound growth rate of 50% forever, or you will exceed the mass of the known universe.


Hard to argue with that; forever is a long time. But how about just one more year? The universe could surely take another 2.5 million T-badged electric vehicles in its stride. As it was, the consensus for 2024 stood at just under 2.2 million vehicles. But that was before Tesla informed investors about its current position vis-a-vis the waves in lieu of providing an actual number.


Throughout the past year, as Tesla’s margins shrank and growth prospects dimmed, other narratives were deployed by both Musk and the more starry-eyed analysts to support the valuation, centered on artificial intelligence and robotics. One reason why Musk’s recent thinly veiled threat to take his AI visions elsewhere unless he gets a giant slug of new Tesla stock rings hollow is that he has made AI a critical pillar of Tesla’s valuation — and, therefore, the bulk of his own wealth.


On Wednesday evening, the narrative was centered Bloomberg   more    on the relatively humdrum question of a new car. Humdrum relative to humanoid robots, but absolutely vital to Tesla’s future. That same morning, with exquisite timing, a story broke on Reuters about Tesla telling suppliers it would begin production of a new mass-market EV in mid-2025, citing unnamed sources. Musk said on Wednesday’s call that production might begin in Texas in the second half of that year.


Tesla needs this cheaper EV — indeed, the industry does. The “next generation” model’s absence from a big Tesla strategy presentation last March was the most talked-about aspect of that presentation; the vehicular equivalent of Gay Talese’s elusive, cold-stricken Sinatra. Much of the blame for slowing growth in EV sales in the US in general can be put down to a product lineup skewed toward expensive, often heavyweight models.


Tesla’s recently released Cybertruck epitomises the problem and, given the money and effort diverted to its production, it represents a giant missed opportunity to expand the addressable market quicker. Musk boasted that demand for the Cybertruck is “off the hook” but eschewed offering any near-term numbers.

Meanwhile, even as some legacy automakers struggle with electrification, others are producing well-regarded EVs or are about to release cheaper models. Similarly, Apple Inc. is reportedly scaling back ambitions for a long rumoured EV project. While that might sound good for Tesla, if it does mean Apple finally releasing an EV, that would likely be a premium product competing directly with the Models S and X, both of which would be virtually classic cars in EV years by then.


Tesla can, of course, point to earlier growth—the first wave—and success in mainstreaming EVs. Plus, its vaunted approach to reducing the cost of EVs by reimagining their manufacturing is surely the right one. The company is capable and well-funded.


Yet, faced with the hard reality of these latest results, the benefit of the doubt here, never small, becomes overwhelming. Consider: Tesla began 2023 valued at $341 billion. Over the ensuing 12 months, earnings fell by 24% (excluding the fourth quarter’s non-cash tax benefit) and the consensus forward earnings estimate for Tesla dropped by 27%. Valuation today: $660 billion. That wave needs to be a tsunami.



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